Inventories of manufactured durable goods in December, up seventeen of the last eighteen months, increased $1.3 billion or 0.4 percent to $343.5 billion. This was at the highest level since the series was first stated on a NAICS basis in 1992.

As we always do, we will focus on the tech sector, looking at the summary category of Computers and Electronic Products and updating our charts with the December data.

The following chart shows how Shipments have been trending ever lower. Note that despite shipments of consumer electronics increasing for the holiday selling season, it wasn't nearly enough to affect the rapidly declining trend.

This next chart looks at New Orders. Another plunging trendline.

New Orders fell over 7% from November to December which seemed like rather brutal drop. This prompted me to recast the chart above into one that tracks the percent change from month to month.

It is easier to see now that December's move was one of the biggest in percentage terms since the middle of 2007. Unfortunately, that move was down and serves to more than negate the positive move seen in the previous month.

The next chart shows total inventories. The increase in inventories has been inexorable and has reached the highest level in three years.

Conclusion --

Tech is still in a tough situation. Summarizing what we have seen in the charts we have the following points:

Shipments continue to fall though not so much as the previous month. The trend, however, remains clearly down.

New Orders plunged in December. The trend here is also down.

The buildup in Inventories continues unabated

These charts show that the downturn in tech hasn't showed any evidence of a bottom yet. Shipments and New Orders continue to decline in tandem.

The rise in inventories is another troubling sign. By the time demand begins to return, there will be high levels of inventories to be worked through before the tech industry can begin to really ramp up production. In the meantime, the industry will continue to run at low capacity, depressing margins.

The conclusion is that a recovery in tech is unlikely in the near term. Given the continued drumbeat of layoff announcements, it appears that tech industry management feels the same way.

Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.

Subscribe

Search this blog:

Trade-Radar Stock Inspector version 7 just released!

Download the 45-day free trial

bulletin board

Version 7.0 of the TradeRadar software is now available on the Download page. Great improvements in usability and configurability - supports more investing styles, looks even better, runs faster, charts integrated into both main screen and Watch List reports. Significant automation has been added to make it easier than ever to use.

Visit TradeRadar Alert HQ and download free lists of stocks and ETFs that are ready to make a move. Actionable trading signals available. Alert HQ - now completely free!